India's Gold Import Bill May Reach Record High, Warns Uday Kotak

Veteran banker Uday Kotak has sounded a warning about India's gold import bill, which could reach USD 88-90 billion in FY27. Speaking at the Conference on Financing India's Journey Towards Viksit Bharat in New Delhi, Kotak emphasized the need for a fresh policy approach to balance household demand for gold with the impact of imports on the country's external finances.

Kotak expects the current account deficit to rise to around USD 60 billion in FY27 if crude oil prices average about USD 90 a barrel. He sees gold imports rising to as much as USD 90 billion, which would add pressure to India's import bill. The current geopolitical tensions have already pushed up energy prices.

Kotak also noted that Indian households hold substantial wealth in gold, but much of that wealth remains outside productive economic activity. He argued that any policy response should account for people's demand for gold while addressing the pressure on the capital and current accounts. Tighter fiscal consolidation is also necessary, as India's consolidated fiscal deficit remains above 7%, according to experts.